United States District Court, S.D. New York
ARMANDO MARTINEZ, DIEGO FABIAN COCHA GAONA, GABRIEL GARCIA, JERONIMO RIVERA, and LUIS ALBERTO BOTZOTZ QUINO, individually and on behalf of others similarly situated, Plaintiffs,
SJG FOODS LLC d/b/a BENARES f/k/a BALUCHI'S, TRIBECA RESTAURANT LLC d/b/a BENARES, f/k/a BALUCHI'S RAKESH AG-GARWAL, INDER SINGH, GURVINDER SAHNI, RANJIT SINGH, YOGEETA SAHNI, and SUKHDEV SINGH, Defendants.
OPINION AND ORDER
ABRAMS, United States District Judge
bring this action against Defendants for alleged violations
of the Fair Labor Standards Act ("FLSA") and the
New York Labor Law ("NYLL"). Before the Court is
the parties' application for approval of a settlement
agreement. For the reasons set forth below, the Court
declines to approve the proposed settlement agreement at this
promote FLSA's purpose of ensuring 'a fair day's
pay for a fair day's work, ' a settlement in a FLSA
case must be approved by a court or the Department of
Labor." Hyun v. Ippudo USA Holdings, No.
14-CV-8706 (AJN), 2016 WL 1222347, at *1 (S.D.N.Y. Mar. 24,
2016) (quoting Cheeks v. Freeport Pancake House,
Inc., 796 F.3d 199, 206 (2d Cir. 2015)). To obtain
approval, the parties must demonstrate that their agreement
is "fair and reasonable." Beckert v.
Ronirubinov, No. 15-CV-1951 (PAE), 2015 WL 8773460, at
*1 (S.D.N.Y. Dec. 14, 2015) (citation omitted). "A fair
settlement must reflect a reasonable compromise of disputed
issues rather than a mere waiver of statutory rights brought
about by an employer's overreaching." Chauca v.
Ab-itino's Pizza 49th St. Corp., No. 15-CV-06278
(BCM), 2016 WL 3647603, at *1 (S.D.N.Y. June 29, 2016)
(quoting Mamani v. Licetti, No. 13-CV-7002 (KMW),
2014 WL 2971050, at *1 (S.D.N.Y. July 2, 2014))). "In
determining whether the proposed settlement is fair and
reasonable, a court should consider the totality of
circumstances, including but not limited to the following
factors: (1) the plaintiffs range of possible recovery; (2)
the extent to which the settlement will enable the parties to
avoid anticipated burdens and expenses in establishing their
respective claims and defenses; (3) the seriousness of the
litigation risks faced by the parties; (4) whether the
settlement agreement is the product of arm's-length
bargaining between experienced counsel; and (5) the
possibility of fraud or collusion." Wolinsky v.
Scholastic Inc., 900 F.Supp.2d 332, 335 (S.D.N.Y. 2012)
(internal quotation marks omitted).
Court addresses three aspects of the proposed settlement
agreement: (1) the release provision, (2) the confidentiality
provision, and (3) the attorneys' fees provision. The
proposed agreement in its current form must be rejected for
the reasons discussed below.
Court will not approve the sweeping "release"
provision in the proposed settlement agreement. "In FLSA
cases, courts in this District routinely reject release
provisions that 'waive practically any possible claim
against the defendants, including unknown claims and claims
that have no relationship whatsoever to wage-and-hour
issues.'" Gurungv. White Way Threading LLC,
No. 16-CV-1795 (PAE), 2016 WL 7177510, at *1 (S.D.N.Y. Dec.
8, 2016) (quoting Lopez v. Nights of Cabiria, LLC,
96 F.Supp.3d 170, 181 (S.D.N.Y. 2015)). Moreover, "[i]n
the context of an FLSA case in which the Court has an
obligation to police unequal bargaining power between
employees and employers, such broad releases are doubly
problematic." Martinez v. Gulluoglu LLC, No.
15-CV-2727 (PAE), 2016 WL 206474, at *2 (S.D.N.Y. Jan. 15,
2016) (quoting Camacho v. Ess-A-Bagel, Inc.,
"No. 14-CV-2592 (LAK), 2014 WL 6985633, at *4
(S.D.N.Y. Dec. 11, 2014)). For this reason, "[a] number
of judges in this District refuse to approve any FLSA
settlement unless the release provisions are 'limited to
the claims at issue in this action.'" Cionca v.
Interactive Realty, LLC, No. 15-CV-5123 (BCM), 2016 WL
3440554, at *3 (S.D.N.Y. June 10, 2016) (quoting
Lazaro-Garcia v. Sengupta Food Servs., No.
15-CV-4259 (RA), 2015 WL 9162701, at *2 (S.D.N.Y. Dec. 15,
release provision in this agreement is too broad to survive
judicial scrutiny. It begins by requiring Plaintiffs to
"unconditionally release and forever discharge"
Defendants and any related entities "of all charges,
complaints, claims, and liabilities of any kind whatsoever,
known or unknown, suspected or unsuspected . . . which each
Plaintiff at any time has, had or claimed to have against
Defendants relating to their employment with Defendants and
regarding events that have occurred as of the Effective Date
of this Agreement." See Agreement ¶ 3,
Dkt. 21. It then provides a lengthy but non-exhaustive list
of statutes and claims barred by the release-ranging from
Title VII of the Civil Rights Act of 1964 to defamation at
common law. See Id. This provision is overbroad: it
requires Plaintiffs to waive virtually any claim, of any type
against Defendants or any possibly related entity as long as
it "relat[es] to their employment with Defendants"
and has "occurred as of the Effective Date of this
Agreement, " a date which is undefined in the Agreement.
This provision does not meet the standards established for
approval by courts in this District. See, e.g.,
Lazaro-Garcia, 2015 WL 9162701, at *2 (finding that an
agreement requiring plaintiff "to waive essentially all
claims that may have arisen out of his employment with
Defendants" was not fair and reasonable).
true that the general release in this agreement is mutual.
Some courts in this District have approved release provisions
on the basis of their mutuality. See, e.g., Cionca,
2016 WL 3440554, at *4 (approving mutual general release);
Lola v. Skadden, Arps, Meagher, Slate & Flom
LLP, 13-CV-5008 (RJS), 2016 WL 922223, at *2 (S.D.N.Y.
Feb. 3, 2016) (same). In the Court's view, however,
"[t]he fact that the general release is styled as
mutual, although favoring the settlement, does not salvage
it, absent a sound explanation for how this broad release
benefits the plaintiff employee." Gurung, 2016
WL 7177510, at *2;seealso, e.g., Flores-Mendietav.
Bitefood Ltd., 15-CV-4997 (AJN), 2016 WL 1626630, at *2
(S.D.N.Y. April, 21, 2016) (rejecting a mutual release
provision and finding that the Court "cannot
'countenance employers using FLSA settlements to erase
all liability whatsoever in exchange for . .. payment of
wages allegedly required by statute.'" (alteration
in original) (quoting Nights of Cabiria, 96
F.Supp.3d at 181)). As Judge Engelmayer explained in
Gurung, "despite the formal reciprocity of such
releases, their practical effect in some cases may be
lopsided because they may stand to benefit only the employer
defendant, who realistically may be less likely than the
employee plaintiff to have latent claims against its
adversary." Gurung, 2016 WL 7177510, at *2.
Here, the parties have provided no basis for finding that
this release provision provides Plaintiffs any comparable
benefit; indeed, whereas the agreement provides a long list
of the claims an employee may assert against her employer, it
provides no illustration of a claim that the employer may
assert against the employee. Thus, the Court cannot approve
this general release provision, notwithstanding its
Court also rejects the proposed agreement's
confidentiality provision. "Both before and after the
Second Circuit's decision in Cheeks v. Freeport
Pancake House, 796 F.3d 199 (2d Cir. 2015), courts in
this Circuit have routinely found confidentiality provisions
in FLSA settlements against public policy."
Martinez, 2016 WL 206474, at *1 (collecting cases).
"[A] nondisclosure agreement in an FLSA settlement, even
when the settlement papers are public[ly] available on the
Court's docket, is 'contrary to well-established
public policy' because it inhibits one of the FLSA's
primary goals-to ensure 'that all workers are aware of
their rights.'" Camacho, 2015 WL 129723, at
*2 (quoting Guareno v. Vincent Perito, Inc., No.
14-CV-1635 (WHP), 2014 WL 4953746, at * 1 (S.D.N.Y. Sep. 26,
confidentiality provision in this agreement prohibits the
parties from disclosing "directly or indirectly, any
claims asserted in the lawsuit or any claims of unlawful
conduct by Defendants, or any of the terms or conditions of
the Agreement, any related negotiations, or the amount or
nature of any consideration paid (either specifically or as a
range), including the Settlement Amount." Agreement
¶ 4. This provision, like the release provision, is
overbroad: Plaintiffs may not disclose even the existence of
a settlement-let alone the settlement terms or amounts-
"except as necessary to accountants, spouses, tax
preparer, and attorneys, " and only if "he or she
informs those entities and/or individuals of this provision
requiring confidentiality and that they agree to be bound by
its terms." See Id. Moreover, the parties'
insistence on the confidentiality of this agreement is
"difficult to comprehend here, as this information has
already been disclosed ... on the public record through ECF
filings." Hyun, 2016 WL 1222347, at *3. In
light of the "well-settled principle that
'confidentiality provisions in FLSA settlements are
contrary to public policy, '" the Court will not
approve this provision of the proposed agreement.
Id. (alteration omitted) (quoting Soma v. 65 St.
Marks Bistro, No. 15-CV-327 (JLC), 2015 WL 7271747, at
*4 (S.D.N.Y. Nov. 6, 2015)).